PRIVATE PLACEMENT VARIABLE UNIVERSAL LIFE INSURANCE

Transcription

1 PRIVATE PLACEMENT VARIABLE UNIVERSAL LIFE INSURANCE

2 ENSPIRE enables investors to: Create a lasting legacy Explore alternative investment options Diminish the impact of taxes Optimize performance with transparent, lower costs

3 BUILD MORE THAN A PORTFOLIO. Build a legacy.

4 Sensible strategies build smart portfolios. Three essential components craft the successful portfolio: time, asset diversification, and wealth preservation. While most investors are familiar with the building blocks of time and diversification, wealth preservation often requires more effort, particularly for affluent investors contending with the voracity of taxes. Top bracket taxpayers who already pay 39.6% in federal taxes must also factor state and local taxes as well as the taxation of capital gains and qualified dividends as part of the annual erosion equation. Taxes on the whole can be the wrecking ball of wealth preservation, leaving investors to seek tax-smart strategies as a form of damage control. Even the wisest investors may unknowingly contribute to their wealth erosion by not planning for income and estate taxes. In many instances, though never named on an election form, the IRS may end up as an estate primary beneficiary. An astute strategy helps shield investor assets from the wealth erosion of taxes. A systematic investment approach, sometimes called a Structured Alpha, is meant to optimize the drivers that affect an investor s risk and return. High net worth investors should consider a plan that combines the benefits of tax-buffering options with long-term wealth accumulation. A $1 million investment with an assumed annual return of 8% over 20 years produces a very different outcome when the strategy is equipped to address tax erosion: Investor A chooses a solution that grows tax-deferred, and is not subject to income nor estate taxes, as it is owned by an irrevocable life insurance trust. Investor A TAX-DEFERRED Investor B TAXABLE $1M $1M Now Investor B opts for a traditional, taxable option that is subject to income tax of 39.6% for those in the highest tax bracket. $4.6M Grows Tax Deferred 20 Years $3M Growth is Subject to Annual 39.6% Taxes Tax deferral made a $1.6M difference in this scenario. But tax deferral is only one aspect of tax smart investing. Strategies to confront retirement income and estate taxes should be considered as well. 2 This scenario demonstrates tax deferral and is not specific to any contract or product. It does not include any contract or investment fees and expenses.

5 PRIVATE PLACEMENT IS PORTFOLIO power. Private placement securities like private placement life insurance offer a select group of accredited investors the option to effectively raise capital without regard to the registration requirements of the federal Securities Act of 1933, the Investment Company Act of 1940, or the rules for public disclosure. As long as federal qualifications are met, private placements are void of any public offering, public solicitation, or advertising; but they must comply with state laws and all anti-fraud provisions of securities laws. The blueprints of private placements products vary, so investors are encouraged to consider their investment options. Generally, contributions are significant and applied immediately for long-term, tax-free growth. Costs are comparably low, and asset protection is reasonably high. Private placements offer affluent investors greater alternative investment options with more asset control and protection from tax-provoked wealth erosion. The reward is a wealth-building tool with high profit potential. BUILDING A LEGACY IS A mindset. The mindful investor questions what his or her legacy will be and what strategy can generate the most potential. Building a legacy reaches beyond the framework of common investments, and ENSPIRE private placement products allow investors to leverage existing wealth against the risks of time and taxes to create and protect a lasting intergenerational legacy. Specifically, ENSPIRE Vision Private Placement Variable Universal Life (PPVUL) is designed to help investors achieve a truly lasting legacy. 3

6 A new Vision for wealth accumulation and protection TRADITIONAL LIFE INSURANCE CAN BE A POLITE BUT TRITE TRUTH. While variable universal life insurance (VUL) offers a number of important tax advantages it is often overlooked as a tool for wealth building because it is typically associated with high costs and cumbersome processes. VUL Advantages Tax-deferred growth Tax free allocations Tax free distributions Tax free death benefit VUL Disadvantages Cumbersome underwriting Higher costs Hidden fees Restricted investment control ENSPIRE s private placement platform is a true legacy building strategy. ENSIRE S approach completely reimagines variable universal life insurance by retaining its benefits and eliminating its baggage. ENSPIRE harnesses the power of private placement with variable universal life insurance with emphasis on improved simplicity, responsibility, transparency, and control. 4

7 Introducing ENSPIRE Vision SM Private Placement Variable Universal Life (PPVUL). INSURANCE REIMAGINED ENSPIRE Vision SM PPVUL Traditional VUL Offerings Simple Swift underwriting, with a goal of issuing policies 30 days faster than the industry average with electronic signature processing, on-site evaluation, and the most efficient account administration. Complex Traditional applications take up to 90 days with extensive trails of paperwork, physical assessments, approvals and underwriting. $ Responsible ENSPIRE s more accountable, cost efficient product design is only 0.75% for M&E service fees. $ Expensive Average VUL insurance costs as much as 1.5% for M&E services, twice that of ENPSIRE private placement products 1. Transparent Open product design with no hidden fees, no surrender charges, no upfront loads, and no distribution fees. Concealed Typical policies carry various fees and surcharges for processing, servicing, and management often buried within the contract. Controllable Extensive investment offerings complement other portfolio assets in a entirely open and supported architecture that optimizes performance. Restricted Common insurance investments manage risk by restricting when, where and how the investment is allocated, not necessarily how the investor chooses. 1 Understanding VUL Policy. (Financial Advisors Magazine, June 22, 2015). 5

8 Why choose ENSPIRE? Achieving the best results requires choosing the best resources. ENSPIRE believes in the power of premier partnerships and has built a unique brand of private placement wealth management that offers industry-leading expertise. The collaboration of these partners creates a more viable, visible option for investors seeking to create a successful legacy. MEET THE PARTNERS: ENSPIRE Investments is committed to helping affluent investors build legacies that optimize returns and minimize taxes via our platform of reengineered private placement solutions. ENSPIRE embraces the ideals of simplicity, responsibility, transparency and partnership as the best methods of growing wealth to the level of a legacy above and beyond traditional portfolios. To that end, ENSPIRE selects best-in-class partners to achieve superior results. THE CUSTODIAN State Street Bank is among the world s longest-standing and secure financial institutions that holds and manages money for millions of people, currently responsible for 11 percent of the world s assets.* As part of the ENSPIRE team, State Street Bank provides the cash-holding services of the investments. THE REINSURER Gen Re is the leading provider of investment protection and is a member of the Berkshire Hathaway family of companies. The company s superior A++ rating from A.M. Best, Aa1 financial strength rating from Moody s, and AA+ claims paying ability rating from Standard & Poor s reflects the company s commitment to wealth management. Currently, Gen Re holds $14 billion in capital and $6 billion in premiums under management. THE POLICY ISSUER IPL of South Dakota, USA, is a specialized insurer with the singular strategic focus of providing private placement insurance solutions for the affluent investor to efficiently accumulate and transfer wealth to successive generations. IPL is recognized as an industry innovator of the proper use of separately managed accounts with exceptional partners in Administration, Custodians, RIA, Investment Managers, Reinsurers and Advisors. Responsible for 11 percent of the world s assets.* Financial strength rated A++ by A.M. Best; Aa1 by Moody s; AA+ by S&P; and 100 by COMDEX. Industry innovator with singular strategic focus in private placement products. 6 * State Street and McKinsey Global Institute, Global Capital Markets, December 31, 2013.

9 WITH ENSPIRE PRIVATE PLACEMENTS, INVESTORS BUILD MORE THAN PORTFOLIOS They build legacies. Building a Legacy ENSPIRE Investments are solely focused on assisting the affluent investor to build, manage, and protect a lifetime of wealth through strategic, tax erosion-resistant alternative sources. Building a Legacy Protecting the Investment ENSPIRE private placement death benefits are fully backed by Gen Re, the industry s best reinsurance provider with the industry s best available ratings for financial strength. Building the Investment Building the Investment We are in strategic partnership with State Street Bank to provide secure custodianship of the investor s cash contributions that provide the foundation for long-term wealth growth. Investors working with their advisors have an unparalleled selection of funds with no revenue sharing and full control of the underlying investments. This is when the elements of time and compound interest merge with tax deferred benefits, creating greater savings without the erosion of taxes. Issuing the Contract Issuing the Contract We are entirely U.S.-based and managed. Upon initiating the investment, monies are instantly wire-transferred into the holding account, and the PPVUL policy is issued by Investors Preferred Life Insurance Company. From this moment, the death benefit is in effect and begins its own wealth accumulation process in tandem with that of the initial investment. Creating the Trust Creating the Trust Once qualified, we enlist the favorable tax advantages of the South Dakota state tax code to establish the trust. If a trust already exists, the investor s funds are set up within a South Dakota limited liability corporation (LLC) to leverage the same tax advantages. Investors may appoint their Investment Advisor as trustee of the account to ensure a seamless, intergenerational transition of the wealth legacy. Underwriting and Qualifying Underwriting and Qualifying Our simplified, proactive application process uses electronic signatures, on-site evaluations, a dedicated underwriter, and direct communication to ensure more convenient, secure set-up with reduced time, paperwork, and cost. With exception of the in-home medical tests, nearly all processes are handled electronically for improved speed and accuracy. 7

10 Be ENSPIRED. Client: Jack Age: 45 Occupation: Executive at an industry-leading technology firm. Investment Goals: To accumulate as much wealth as possible by using a smart investment building block To create tax-free retirement income To leave a wealth legacy that can transfer income tax-free to his heirs ENSIPRE PPVUL Policy Summary: Preferred non smoker status Level death benefit Premium: $2 million for 5 years The Strategy: in order to optimize performance, Jack wants the lowest death benefit permitted, to qualify as life insurance versus a modified endowment contract (MEC). This means he can take tax-free distributions. $2M premium annually for the first 5 years Tax-Free Income! tax-free distributions annually for 20 years DAY ONE YEAR 12 YEAR 25 YEAR 46 Age: 45 Age: 57 Age: 70 Age: 91 Initial Death Benefit: $41M Death Benefit: Just Under $2.5M Jack reduces his death benefit to just under $2.5 million in order to maximize his cash value growth. This change complies with IRS rules regarding life insurance and does not create a MEC. Cash Value: $34.4M Death Benefit: Almost $25M Jacks starts taking tax-free annually Cash Value: $17.3M Death Benefit: Almost $20M $20M even after taking $42M of retirement income! 8 Assumed 7% annual rate of return with all policy fees factored into the results.

11 BUILD MORE THAN A PORTFOLIO. Build a legacy.

12 EnspireInvestments.com DISCLOSURES Private Placement Variable Universal Life (PPVUL) is an unregistered security product and is not subject to the same regulatory requirements as registered products. Therefore, PPVULs should only be presented to accredited investors or qualified purchasers as described by the Securities Act of PPVULs combine the protection and tax advantages of life insurance with the investment potential derived from a comprehensive list of investment options. The insurance component provides death benefit coverage and the investment component provides the potential for increasing the policy s value. The value of the investments will fluctuate, and when redeemed, may be worth more or less then their original cost. Also, there is a cost to the life insurance, which will be deducted from the investments. Purchases, withdrawals and death benefits may be subject to tax, which can vary by jurisdiction. It is recommended that the PPVUL be purchased in conjunction with tax and legal advice from trusted advisors. This presentation contains information which has been deemed to be accurate, but in no way should replace that advice. The content of this presentation is intended for informational use only, and should not be construed as investment, legal or tax advice or a contract. The financial information contained in this presentation is purely hypothetical, and in no way represents a guarantee of, or predicts the future of, investment and product performance. In order to purchase a PPVUL, the policy owner and the insurance company will need to enter into a written contract, the terms of which will be described in the Offering Memorandum and PPVUL Policy. Investors should fully consider the PPVUL possible advantages and disadvantages prior to investing. Please read the Offering Memorandum carefully prior to investing in this product. Securities offered through Bluestone Investment Banking Group, Member FINRA, SIPC. Insurance Dedicated Fund The PPVUL investments must be on a separate platform dedicated to the specific contract. This platform will be determined by the life insurer. The platform will have transactional and reporting links established for the FA or FA s firm. Investor Control The assets within the PPVUL must not be controlled by the underlying policyholder, therefore, the FA must have clear discretionary authority to make the investment decisions within the PPVUL. Because of this lack of investor control, many investments which the underlying client may have been precluded from owning would then be open to the FA to invest. This may be particularly attractive to FAs who have clients who work in the financial services industry and US expats. IRC Section 817(h) 55/70/80/90 The FA must not allocate more than: 55% into one security, 70% into two securities, 80% into three securities or 90% into four securities. If this rule is broken, the PPVUL may not qualify as a life insurance contract and therefore lose its tax advantaged status. PPVUL Expenses Expenses for the contract may include costs for life insurance, asset based administration fees, and jurisdictional taxes. This costs will be transparent to the FA and investor prior to entering the contract. Minimum Death Benefit Qualification Depending on the amount invested and the clients age, there will be a minimum death benefit which will need to be established in order for the PPVUL to be deemed a life insurance contract. Some clients may not be able to be approved for life insurance, depending on their health.

13 EnspireInvestments.com DISCLOSURES Private Placement Variable Universal Life (PPVUL) is an unregistered security product and is not subject to the same regulatory requirements as registered products. Therefore, PPVULs should only be presented to accredited investors or qualified purchasers as described by the Securities Act of PPVULs combine the protection and tax advantages of life insurance with the investment potential derived from a comprehensive list of investment options. The insurance component provides death benefit coverage and the investment component provides the potential for increasing the policy s value. The value of the investments will fluctuate, and when redeemed, may be worth more or less then their original cost. Also, there is a cost to the life insurance, which will be deducted from the investments. Purchases, withdrawals and death benefits may be subject to tax, which can vary by jurisdiction. It is recommended that the PPVUL be purchased in conjunction with tax and legal advice from trusted advisors. This presentation contains information which has been deemed to be accurate, but in no way should replace that advice. The content of this presentation is intended for informational use only, and should not be construed as investment, legal or tax advice or a contract. The financial information contained in this presentation is purely hypothetical, and in no way represents a guarantee of, or predicts the future of, investment and product performance. In order to purchase a PPVUL, the policy owner and the insurance company will need to enter into a written contract, the terms of which will be described in the Offering Memorandum and PPVUL Policy. Investors should fully consider the PPVUL possible advantages and disadvantages prior to investing. Please read the Offering Memorandum carefully prior to investing in this product. Securities offered through ENSPIRE Investments, Member FINRA, SIPC. Insurance Dedicated Fund The PPVUL investments must be on a separate platform dedicated to the specific contract. This platform will be determined by the life insurer. The platform will have transactional and reporting links established for the FA or FA s firm. Investor Control The assets within the PPVUL must not be controlled by the underlying policyholder, therefore, the FA must have clear discretionary authority to make the investment decisions within the PPVUL. Because of this lack of investor control, many investments which the underlying client may have been precluded from owning would then be open to the FA to invest. This may be particularly attractive to FAs who have clients who work in the financial services industry and US expats. IRC Section 817(h) 55/70/80/90 The FA must not allocate more than: 55% into one security, 70% into two securities, 80% into three securities or 90% into four securities. If this rule is broken, the PPVUL may not qualify as a life insurance contract and therefore lose its tax advantaged status. PPVUL Expenses Expenses for the contract may include costs for life insurance, asset based administration fees, and jurisdictional taxes. This costs will be transparent to the FA and investor prior to entering the contract. Minimum Death Benefit Qualification Depending on the amount invested and the clients age, there will be a minimum death benefit which will need to be established in order for the PPVUL to be deemed a life insurance contract. Some clients may not be able to be approved for life insurance, depending on their health.